Base Oils-lubes overview Transcript

Base Oils are a synonym for base-stocks, they are mixed with additives to form finished lubricants. Biggest end-use is the automotive sector and there’s a big trend right now for higher quality base stocks, so we’re actually seeing some consolidation of our Group 1 Base Oil plants and a bigger move to Group 2, Group 3 and even gas-to-liquids plants.

News & analysis

Regional overview

Regional overview

Updated to Q4 2014

Having held largely steady throughout the summer, European Group I base oil prices collapsed throughout the fourth quarter, starting with the export market from the start of September and followed by the domestic market two weeks later. Prices began to stabilise around mid-December but further decreases could not be ruled out at the time of writing.

Various factors come together to create substantial downward pressure on prices. Firstly, underlying demand has been poor for much of 2014 as a result of challenging conditions in the finished lubricants market. On top of this came the new volumes of Group II and Group III base oils with major new plants in the US and Spain. These grades are of higher quality than Group I but cost less to produce, and have been aggressively marketed. A significant rationalisation of Group I capacity in Europe is expected.

Finally, crude oil prices – and therefore those of vacuum gasoil (VGO), the feedstock for base oils – collapsed. Not only did these collapses filter down directly to base oils by way of improved margins, but they also exacerbated already significant oversupply. With crude and VGO prices so low, refineries and base oil plants were run at high rates, with refiners making money despite falling product prices.

Price reporting

Price reporting

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Editor

Price history

Price history

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Methodology

ICIS price assessments are based on information gathered from a wide cross-section of the market, comprising consumers, producers, traders and distributors from more than 250 reporters world-wide. Confirmed deals, verified by both buyer and seller, provide the foundation of our price assessments.

Our in-depth market knowledge drives our specialist focus, as we recognise the importance of individual market dynamics and not a one-size-fits-all approach.

Over 25 years of reporting on key chemicals markets, including Base oils-Lubes, has brought global recognition of our methodology as being unbiased, authoritative and rigorous in preserving our editorial integrity. Our global network of reporters in Houston, London, Singapore, Shanghai, Guangzhou, Mumbai, Perth and Moscow ensures unrivalled coverage of established and emerging markets.

Base Oils-Lubes Methodology

The main use for base oils is in the manufacture of lubricants, of which there are many thousands of types.